Documentation is no joke and coffee is not milk: Two important tax rulings

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26 Mar Documentation is no joke and coffee is not milk: Two important tax rulings

Posted at 15:00h in Donor News by

At the McPherson County Community Foundation, we want to help you make the most of your charitable giving. Recent court rulings offer an important reminder: when it comes to tax deductions for donations, good intentions alone are not enough. The IRS and the courts apply the rules very carefully, and small details can make a big difference.

Keep good records for charitable donations

A recent case called Gibson v. Commissioner highlights how important it is to properly document your gifts. In this case, a married couple donated nearly $194,000 worth of personal property to charity. The court did not question that the items were donated. However, the couple lost the deduction because they did not follow the required documentation rules. They were missing key records, including written acknowledgments from the charity and a qualified appraisal.

The takeaway is simple: to claim a charitable deduction, you must follow the documentation rules closely. Forms, appraisals, and written acknowledgments are not just paperwork. They are required by law. If you plan to donate valuable items, it is wise to talk with a professional and make sure you keep the right records before making the gift.

A charity’s status can change

Another case, Milk Saving Starving Children Foundation v. Commissioner, shows why it is important to be thoughtful about the organizations you support. In this case, the IRS revoked a nonprofit’s tax-exempt status. Although the organization originally had a charitable mission, its activities eventually shifted away from that purpose and began providing private benefits instead.

For donors, this is a reminder that not every organization remains qualified forever. Before making a significant gift, especially to a newer or lesser-known nonprofit, it can help to confirm the organization’s status and learn more about how it operates.

How MCCF can help

We are here to be a resource as you plan your charitable giving. Our team can help you:

  • Understand the documentation you need for tax deductions

  • Verify charitable organizations

  • Explore giving options that help ensure your gifts are used as intended

Our goal is to help you give with confidence, clarity, and peace of mind while making the greatest possible impact.